When a levy hits, people look at their pay stub and see a dozen deductions above the net pay line. Health insurance. Dental. 401(k). Union dues. A savings plan. Then they ask the right question: does the IRS take its cut before or after all of that?
The answer is a mix of law and policy, and it is more favorable than the statute alone suggests.
The law versus the policy
IRM 5.11.5.4.5 states both sides in two sentences. A levy legally attaches to the taxpayer’s gross income minus the exempt amount. However, by policy, a levy only attaches to the taxpayer’s usual take-home pay. The IRM points to IRM 1.2.1.6.6, Policy Statement 5-29, which limits a levy on salary or wages generally to take-home pay.
Publication 1494 reflects the same approach. It describes its tables as showing the amount of an individual’s income, take-home pay, that is exempt from levy.
So in the ordinary case, your employer takes your usual deductions out first, then applies the exempt amount to what is left, and sends the rest to the IRS.
The exception: voluntary deductions that defeat the levy
The policy has a limit. IRM 5.11.5.4.5 says voluntary deductions can be disallowed if they are so large they defeat the levy. Its example is a deduction for a savings account or to buy shares in a mutual fund: that voluntary deduction should be stopped and those funds applied to the levy.
The IRM’s general guidance is to allow the deductions you already have when the levy is served. The IRS notifies the employer and you of any deductions that must stop while the levy is in effect, and you can request managerial review.
No new voluntary deductions
This is the part that catches people. IRM 5.11.5.4.5 says employers generally should not allow new voluntary deductions after receiving the levy. Exceptions can be allowed case by case with IRS approval.
The IRM’s example of an allowable exception: a taxpayer cannot join the company insurance plan until six months on the job, and the levy is served before then. The premium is not unreasonable and is allowable. So a reasonable health insurance premium for a plan you become eligible for later is the kind of thing the IRS can approve. A brand-new 15 percent 401(k) election started the week after the levy arrived is not.
How common deductions are likely to be treated
The IRM gives examples, not an exhaustive list, so think in terms of its two categories: deductions you already had, and whether a deduction is so large or so voluntary that it defeats the levy.
- Tax withholding. Federal, state and local income tax withholding and payroll taxes are part of what produces take-home pay. Treasury Regulation 301.6343-1(b)(4) even lists current tax payments among basic living expenses. Do not reduce your withholding to stretch take-home pay. Falling behind on current-year taxes will block an installment agreement later.
- Health insurance. Existing premiums are ordinarily left alone. The IRM’s exception example involves a reasonable insurance premium.
- Retirement contributions. Existing elections are deductions you already had. A large voluntary contribution, or a new or increased one after the levy, is exactly what the IRS can ask the employer to stop under the defeat-the-levy rule.
- Savings plans and stock purchases. The IRM’s own example of a deduction that should be stopped.
- Court-ordered support. Separately protected under IRC 6334(a)(8) when the order predates the levy. See wage levies and child support.
- Union dues. Treasury Regulation 301.6343-1(b)(4)(ii)(B) lists dues for a trade union as an expense necessary to the production of income in a hardship analysis.
Do not try to out-deduct the levy
I have seen people react to a levy by raising every voluntary deduction to the maximum. It feels like protecting money. It is not. The IRS can tell your employer to stop the deductions, and the attempt undermines the credibility you need for a hardship release or a payment plan. Treasury Regulation 301.6343-1(b)(4)(iii) makes good faith a condition of hardship relief.
When deductions plus the levy leave you short
Sometimes the problem is the reverse. Your necessary deductions, such as family health coverage, eat so much of your gross pay that the take-home figure is low, and then the levy takes everything above the exempt amount. What is left does not cover rent.
That is a hardship case. Bring your pay stubs showing every deduction and your actual expenses, and ask for an economic hardship release. The regulation lists health insurance, medical expenses and current tax payments among reasonable basic living expenses. If a full release is not warranted, a partial release can set the levy at an amount you can survive.
Checking your stub
- Start with gross pay.
- Subtract the deductions that were in place before the levy arrived. That gives usual take-home pay.
- Subtract your Publication 1494 exempt amount. For 2026, a single filer paid biweekly with no dependents keeps $619.23 under Publication 1494 (Rev. 12-2025).
- The remainder should be roughly what went to the IRS.
If the number is far off, ask payroll for the calculation in writing. Then compare with the exempt amount calculator.
An example
Marcus is single, paid biweekly. Gross pay is $2,600. Before the levy he already had these deductions: income and payroll taxes of $520, health insurance of $140, and a 401(k) contribution of $104 (4 percent). His usual take-home pay is $1,836.
Under the take-home pay policy, his employer starts from $1,836, subtracts his 2026 exempt amount of $619.23, and sends $1,216.77 to the IRS. The insurance and the existing 4 percent contribution continue.
Now suppose that the week after the levy arrived, Marcus raised his 401(k) election to 30 percent to shrink his paycheck. That is a new voluntary deduction after the levy, which IRM 5.11.5.4.5 says employers generally should not allow, and it is large enough to defeat the levy. Expect the IRS to tell the employer to stop it. Then expect a harder conversation when Marcus asks for anything else.
If instead Marcus’s problem is that $619.23 every two weeks will not cover his rent and car payment, the answer is a financial statement and a request for an economic hardship release, not a bigger 401(k) election.
A note on 401(k) loans and hardship withdrawals
People under a levy sometimes consider borrowing from a retirement plan or taking a withdrawal to pay the IRS. The IRM’s release rules include releasing a levy when release will facilitate collection, under IRC 6343(a)(1)(B). If you plan to use retirement funds to pay the debt, talk through the tax cost first. Early withdrawals can create new tax on top of the old debt.
The IRS starts from your take-home pay. It does not let you shrink your take-home pay to beat the levy.